Residential Energy Efficiency Report 2023

Last year saw some considerable strides in making homes more energy efficient, especially with the introduction of the Inflation Reduction Act (IRA). 2023 is set to continue this trend as homeowners look to get the most out of the IRA and make their homes more energy efficient, whether to combat rising costs in bills or help the local environment. 

To understand what systems, appliances, and methods are the most popular this year we spoke to 52 top home construction, architecture, and green homebuilding experts. We asked these professionals to give us insight into what their clients are requesting as well as the materials and systems they recommend to make homes more energy efficient in 2023. 

Main Findings:

• 52% of experts say that energy-efficient HVAC is very important to homeowners, way more than solar panels.

• 44% of experts believe that the IRA is not enough to incentivize homeowners to carry out energy-efficient upgrades

• Electric will outnumber gas installations in new homes agree 67% of professionals.

• 65% of experts say smart thermostats will be the most popular energy-efficient feature in 2023.

• A majority of 46% say that mini split heat pumps will be the most requested energy-efficient HVAC system this year.

• 42% of experts recommend metal roofing for the best energy efficiency.

Trends: Top Energy Efficiency Features in 2023, According to Experts

We asked experts to share what they believe are the most popular energy-efficiency home features this year based on what their clients request and their industry insights. Below is a graphic highlighting their responses to which they could choose more than one option.

Smart thermostats are the most popular feature

65% of experts say that a smart thermostat is the energy-efficient feature that the majority of homeowners will be looking to install in their homes in 2023. It comes as no surprise considering that almost 90% of U.S. homes use AC. As an advanced version of the traditional thermostat, a smart version can do a lot more. They are designed to be able to easily control your heating and cooling system in an energy-efficient way. They can be programmed to turn on and off the heating and cooling depending on when there are people at home and when the optimal temperature has been reached. You can control a smart thermostat from an app on your phone making them extremely accessible and handy, hence their popularity. On average you can expect to spend an average of around $300 to install a smart thermostat. 

Homeowners want extra insulation

Having extra insulation will be a top priority this year, say 60% of professionals. Having extra insulation means your heating and cooling appliances need to work less to maintain the ideal temperature in your home and in turn save you money on your monthly bills. Therefore adding extra insulation to your home will pay for itself a few years down the line. The options for insulation are vast, and homeowners of older homes are more likely to need to install more. 

Electric Vehicle (EV) chargers are becoming more necessary

60% of experts believe EV chargers are the most sought-after energy-efficient home feature in 2023. The demand for electric vehicles has risen sharply over the past decade and it is undoubtedly set to continue given the $7,500 tax credit extension for a purchase of a new EV included in the IRA. Moreover, a study by SolarReviews found that EVs combined with rooftop solar cost 40% less than gas-powered cars over their lifetime. So it’s no wonder that more homeowners require a charging station in their homes. Homeowners are likely to spend an average of roughly $1,200 to install an EV charging station. 

Solar panels are a popular feature in 2023

The rise of residential solar energy continues this year, with 54% of experts saying it will be the most popular home feature for energy efficiency. Despite financing being the main obstacle for homeowners installing solar this year, there are still many benefits of solar for homeowners looking to make the switch in 2023, including the federal solar tax credit, combatting extra high energy bills, and the fact that solar panels are cheaper than ever. 

Other popular features

Many features can be implemented in a home to make it more energy efficient. 42% of industry professionals say that low-emissivity glass insulated windows will be highly requested by homeowners in 2023, as well as another 40% who say ENERGY STAR-certified appliances are going to be the most popular feature. Elsewhere, heat pumps (35%), energy storage systems (35%), and ENERGY STAR-certified windows (31%) will be on homeowners' wishlists in 2023.

Homeowners’ Preferences: HVAC and Using Electric Are Important and Popular, Say Experts

There is no ignoring the debate surrounding gas appliances over the past few months. Recent warnings over the potential harm of gas stoves mean that some local governments are taking steps to ban the use of natural gas in new homes and constructions. It is also not so easy to simply compare gas to electric in terms of energy efficiency. This all depends on the appliance or system. But what do homeowners want and consider important in 2023?

Energy-efficient HVAC is far more important than solar panels

52% of experts say that having an energy-efficient HVAC system is very important. Homeowners have different priorities in terms of energy efficiency for the various appliances, systems, and features at home. HVAC is one of the biggest monthly expenses which explains the importance of having a system in place that consumes the least amount of energy possible. Tying in with this is thermal insulation, which 40% of pros believe is very important to homeowners. Having a well-insulated home means less reliance on AC and heating, again resulting in savings on monthly bills. 

However, despite being a growing trend, experts agree that solar panels compared to other home features are less of a priority for homeowners. A majority of 44% say that solar panels are not important. While they do result in savings over time and are an energy-efficient solution, solar panels account for a big investment for homeowners, which might be the reason why they are not yet considered a pressing priority. 

Electric HVAC and appliances are considered important

Experts’ views on the importance of HVAC being electric are varied, with only 20% saying that it is very important and 16% believing that it is not important. However, the majority of professionals surveyed (55%) say that they are at least important to homeowners. As mentioned, HVAC is one of the largest expenses in your home accounting for a hefty percentage of monthly bills. The fact that some gas HVAC systems like furnaces are often more efficient and cheaper to run than their electric alternatives, especially in colder climates, explains the mixed results. On average, running an electric furnace is 2.5 times pricier compared to gas. The U.S. Energy Information Administration estimated that American homeowners would spend approximately $1,359 on electric heating during the winter 2022 to 2023. In contrast, homes using natural gas for heating would incur expenses of around $930 within the same timeframe. 

Electric is more popular than gas in new homes in 2023

67% of experts believe that electric appliances and systems are more popular in new homes this year than gas. However, this popularity often depends on the region, with huge divides in the percentage of new homes using air or ground heat pumps for example. When considering new laws coming into effect in some areas of the country this year and beyond that require new homes and buildings to use electric instead of natural gas, it is no wonder that home-building professionals see these as the most popular options moving forward.

HVAC: Homeowners Are Requesting Mini Split Heat Pumps 

When it comes to energy-efficient HVAC systems in new homes, 46% of experts say that homeowners most request mini split heat pumps. They use an outdoor compressor connected to up to four indoor air handlers to be able to transfer heat into or out of your home. Unlike air conditioners and furnaces, heat pumps can be used both for heating and cooling. Mini split heat pumps do not need ductwork meaning they do not lose energy such as that of standard central air systems. This makes them very energy efficient considering that duct losses can result in more than 30% of energy consumption for space conditioning. 

35% of experts agree that standard heat pumps are set to be the most requested in 2023, followed closely by 33% who say energy-efficient furnaces. Geothermal heat pumps are less common, and only 17% of experts opted for them here.

Roofing: Experts Recommend Metal Roofs and Solar Shingles

We asked home construction professionals to tell us which roofing materials they most recommend for energy efficiency and 42% said metal roofing. This was closely followed by 40% of whom recommend solar shingles. Metal roofs are one of the most energy-efficient options, especially when insulated and given a reflective light-colored coating, therefore acting as a cool roof.  This type of roof has a high level of thermal emittance meaning that the material as well as reflecting sunlight, transfers the heat that it has absorbed back into the atmosphere, helping to keep the house cool. Apart from these benefits, metal roofs are very durable and one of the most sustainable options in the market because of their recyclable capabilities. 

Solar shingles stand out as the sole energy-efficient choice capable of generating electricity. Nevertheless, solar shingles on the market nowadays tend to have pretty decent specifications, but their efficiency falls slightly short when compared to traditional solar panels. Their installation can potentially be more expensive than a standard roof replacement that also includes solar panels, but it is a great choice for homeowners that want to get the benefits of solar without having to sacrifice the aesthetic of their home.

27% of experts recommend green roofs as the best energy-efficient material. They are essentially soil and vegetation atop an often flat roof. These roofs reduce the heat absorbed from the exterior to the interior in the summer months and provide insulation. Studies have shown their effectiveness in reducing heat islands in cities. 

The Inflation Reduction Act Makes 2023 a Great Time for Upgrades 

In 2022, the Senate and the House voted to approve the Inflation Reduction Act (IRA). The $700 billion dollar bill is designed to decrease the current deficit in the U.S. and subsequently cut inflation. Included in the IRA are many incentives for homeowners looking to make their homes more energy efficient. Among credits for solar power installation and battery storage, there is the expansion of the Energy Efficient Home Improvement Credit (EEHIC). This tax credit can amount to 30% of qualified energy efficiency improvements up to $1,200 which is good news for those looking to make these changes. Some of the improvements included are window upgrades, carrying out an energy audit, and installing heat pumps and electric appliances. Homeowners must keep in mind that certain requirements must be met in order to qualify for this credit.

But are these incentives enough to encourage people to switch to more efficient home features?

Experts believe that more can be done to incentivize homeowners

44% of experts believe that the EEHIC is not a big enough incentive for homeowners to undertake energy-efficiency home improvements. While tax credits are beneficial to those who are updating their homes, the majority of industry professionals agree that it isn’t enough to convince homeowners to make changes. The IRA is a relatively new bill and it’s possible that not enough time has passed to judge a real shift in homeowners’ behavior. This could explain the 31% of experts who aren’t sure. 25%, however, do believe that such credits included in the EEHIC are enough of an incentive to make homeowners convert features in their homes to more energy-efficient ones. 

Methodology

For this report, Fixr.com surveyed 52 experts in the home construction industry, including architects and green home-building specialists. Each of the professionals who responded has industry knowledge and know-how on the subjects covered. They based their responses on their first-hand experience with homeowners resulting in an accurate representation of the current state of residential energy efficiency trends, priorities, and recommendations.

To compile the trends and associated percentages, we asked them multiple-choice questions. We rounded all percentages. In most cases, they were able to select more than one option. Below we list most of the experts who participated in the survey. Some wished to remain anonymous.

Expert Survey Respondents

Author

​​Adam Graham is an industry analyst at Fixr.com. He analyzes and writes about the real estate and home construction industries, covering a range of associated topics. He has been featured in publications such as Better Homes and Gardens and The Boston Globe and has written for various outlets including the National Association of Realtors, and Insurance News Net Magazine.